This is an interesting thread to me because in some ways you remind me of myself about 15 years ago or so. We had a good income and 3 kids. We did let it spiral out of control and when I first came here (almost 8 years ago!) we had 6 figure credit card debt.

There is a lot I could say (and you might find it interesting to do a search at look at the threads in this forum I started. If you think people are treating you rough in this thread, go read my first thread here).

Anyway, I think I'll confine myself to 3 topics:

1. We had a nanny for awhile and she was great. But ultimately we saved a lot of money by having au pairs. (I mean au pairs with a legitimate au pair visa from a legitimate agency). Over several years we had 4 different au pairs from Germany, Thailand, and Brazil. It was a great experience for our kids and we still have contract with our au pairs (Facebook friends with all of them). It was more economical than a nanny and we enjoyed the cultural exchange. It may not work for you, but I encourage looking at the au pair program.

2. The biggest problem with your budget is not just the categories not included, but the fact that you did allow for the things that can go wrong in one year that aren't typical of prior years. For example, last year my personal out of pocket medical costs were low. But 3 weeks ago I spent $1500 in 6 hours (an unanticipated, but high necessary ER visit which blew through the $1500 left on my deductible). In a family with 2 parents and 3 kids you can't expect for medical expenses to always be $44 a month (I remember when my son broke his arm twice in one year). Or, your house needs a new roof or whatever. We live in a newer house, yet a couple of months ago we had $1500 in repair costs within a matter of days. One day we had both the plumber and electrician out on the same day. And, that doesn't even count the over the counter microwave that just died. Stuff happens. The dishwasher needs to be replaced, etc. One time we had a hurricane and we had $8000 in tree cleanup related expenses. Or, the piece that just fell off my son's car (2008 vehicle so not that old) and cost almost $900 to replace. Most years you won't have all these. But, you need to budget for at least some of these since you will probably have something at some point.

3. DH and I have been out of debt for awhile. Our expenses now are much less than they once were. Part of this is kids growing up (one is on his own, two in college). But, part of it is us designing our lives to be less expensive. We sold the 4500 SF house with the guest house and pool and live in a much smaller 1 story house (he do have a hot tub on the patio though). We live in an area that is really nice but is farther away from the big city so is less expensive (once DH retired we were free to move to do that).

Moving saved us about $50,000 a year. Part of it is the price of the house, of course, but really that is only part of it. Smaller house, lower utilities. Smaller house, less maintenance, fewer repairs. Living where we live, real estate taxes are less. And so on.

When considering expenses, don't just look at the individual expenses. Look at how all of a lifestyle adds up.

We are now living on much less than we spent years before (and this includes paying for college for our kids) because we made changes that didn't seem that big at the time but have made a major dent in our expenses.

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.

Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.